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The Financial
Services Action Plan (FSAP)
Other directives in the
Financial
Services Action Plan (FSAP)
We have already read about 5 of the most important directives of
the
Financial Services Action Plan (www.financial-services-action-plan.com)
Other
important measures of the plan are:
1. The 3rd Money Laundering Directive
The substantial revision of the FATF recommendations on money laundering and terrorist financing led to adoption of a
3rd Money Laundering Directive (Directive 2005/60/EC
on the prevention of
the use of the financial system for the purpose of money laundering and
terrorist financing), which additionally covers terrorist financing.
It also provides a definition of serious offences and states that money laundering
should be regarded as a criminal offence.
The 3rd ML Directive repealed the 2nd Money Laundering Directive
(Directive 2001/97/EC amending Directive 91/308/EEC on prevention of the use of the financial system for the purpose of money laundering
)
2. Solvency I and Solvency II
Solvency I is for insurance firms what the Capital Requirements
Directive is for banks. Insurers have also to hold capital for
unexpected events, for the stability of the system and for the
protection of the policy holders. The Solvency II, like Basel ii, is more risk sensitive. The new Solvency regime will be developed using the Lamfalussy system. Directive 2002/83/EC concerns the rules governing establishment and conduct of life assurance including the provision of services in other Member States. Directive 2002/13/EC concerns non-life undertakings and adjusts the issue of solvency margins. 3. The Prospectus Directive Directive 2003/71/EC on "the prospectus to be published when securities are offered to the public or admitted to trading and amending Directive 2001/34/EC" The purpose of this Directive is to harmonise requirements for the drawing up, approval and distribution of the prospectus to be published when securities are offered to the public or admitted to trading on a regulated market situated or operating within a Member State. 4. The Transparency Directive Directive 2004/109/EC on "the harmonisation of transparency requirements in relation to information about issuers whose securities are admitted to trading on a regulated market and amending Directive 2001/34/EC" The purpose of this directive is to establish requirements in relation to the disclosure of periodic and ongoing information about issuers whose securities are already admitted to trading on a regulated market situated or operating within a Member State. This directive sets out the rules governing the issue of annual and semi-annual financial reports for securities issuers. 5. The Market Abuse Directive Directive 2003/6/EC on "on insider dealing and market manipulation (market abuse)" Insider dealing is added to the final scope of the directive. The directive is about persons who possesses inside information and use that information by acquiring or disposing of, or by trying to acquire or dispose of, for his own account or for the account of a third party, either directly or indirectly, financial instruments to which that information relates. This directive sets out measures to combat market manipulation. 6. The 4th & 7th Company Law Directives Directive 2001/65/EC "amending Directives 78/660/EEC, 83/349/EEC and 86/635/EEC as regards the valuation rules for the annual and consolidated accounts of certain types of companies as well as of banks and other financial institutions" In order to maintain consistency between internationally recognised accounting standards and Directives 78/660/EEC, 83/349/EEC and 86/635/EEC, it was necessary to amend these Directives in order to allow for certain financial assets and liabilities to be valued at fair value. 7. IAS Regulation COM(2000)359 "EU Financial Reporting Strategy : the way forward" Regulation (EC)1606/2002 on the application of international accounting standards EU companies listed on a regulated market (estimated at around 6,700) should be required to prepare consolidated accounts in accordance with IAS. Finally, let to adoption of the IAS Regulation introducing the International Financial Reporting Standards (IAS/IFRS) for listed companies in the EU. 8. Settlement Finality Directive Directive 98/26/EC "on settlement finality in payment and securities settlement systems" The Directive provides that the opening of insolvency proceedings against a participant shall not prevent funds or securities available on the settlement account of that participant from being used to fulfill that participant's obligations in the system on the day of the opening of the insolvency proceedings. Furthermore, Member States may also provide that such a participant's credit facility connected to the system be used against available, existing collateral security to fulfill that participant's obligations in the system. Insolvency proceedings shall not have retroactive effects on the rights and obligations of a participant arising from, or in connection with, its participation in a system earlier than the moment of opening of such proceedings. 9. Financial Collateral Directive Directive 2002/47/EC "on financial collateral arrangements" The Directive only covers arrangements where the collateral is either cash or financial instruments (mainly securities or interests in securities); It does not cover arrangements governing other types of collateral, for example commercial property, plant and machinery, or book debts (receivables). The purpose of the Directive is to promote the integration and cost efficiency of financial markets. It requires Member States to make collateral arrangements easier to enter into and to enforce. 10. Takeover Bid Directive Directive 2004/25/EC on takeover bids The Directive sets minimum guidelines for the conduct of takeover bids involving the securities of companies admitted to trading on a regulated market. It also includes provisions to protect minority shareholders, by establishing a framework of common principles and general requirements which Member States are to implement through more detailed rules. 11. The 10th Company Law Directive on Cross-Border Mergers Directive 2005/56/EC "on cross-border mergers of limited liability companies" The Directive includes all companies with share capital which, in the unanimous view of the Member States, may be typified as companies having legal personality and separate assets which alone serve to cover the company’s debts. It is aimed primarily at companies which are not interested in forming an European Company. A company taking part in a cross-border merger shall be governed, as far as the merger formalities are concerned, by the provisions of national law to which it is subject that apply to mergers of this type of company with other companies with share capital subject to the same national law. 12. UCITS III Directive 2001/107/EC (amending Directive 85/611/EEC) "on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS) with a view to regulating management companies and simplified prospectuses"; Directive 2001/108/EC (amending Directive 85/611/EEC) "on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS), with regard to investments of UCITS" (UCITS III) FSAP called for a political agreement to be reached, finally led to two new directives . The first sets out the essential harmonisation necessary and sufficient to secure the mutual recognition of authorisation and of prudential supervision systems, making possible the grant of a single authorisation valid throughout the European Union and the application of the home Member State supervision. The second directive widens the scope of financial instruments in which UCITS can invest. 13. E-Money Directive Directive 2000/46/EC "on the taking up, pursuit of and prudential supervision of the business of electronic money institutions" The Electronic Money Directive mandates the establishment of a new prudential supervisory regime for electronic money institutions (ELMIs). The main objectives of the Directive are: (a) to create a regulatory framework to ensure the stability and soundness of ELMIs, so as to increase business and consumer confidence in this new and developing means of payment (b) to eliminate legal uncertainty created by the lack of harmonisation in this field (c) to facilitate access by ELMIs from one Member State into another. 
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